Oneok, Inc. · NYSE:OKE
Oneok — Oneok Inc /New/ — Merger or Acquisition (July 2013)
18 slides from Oneok's merger presentation, Jul 25, 2013
Slide 1: Creating Two Independent, Highly Focused Energy Companies
Creating Two Independent, Highly Focused Energy Companies July 25, 2013
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements contained in this presentation that include company expectations or predictions should be considered forward-looking statements that are covered by the safe harbor provisions of the Securities Act of 1933 and the Securities and Exchange Act of 1934. It is import
Slide 3: Transaction Overview: Unlocking Shareholder Value
Transaction Overview Unlocking Shareholder Value • The ONEOK board unanimously authorized management to pursue a plan to separate the Natural Gas Distribution business into a new standalone publicly traded company – Company to be called ONE Gas, Inc. (NYSE: “OGS”) – 100% regulated natural gas utilit
Slide 4: Strategic Rationale: Why do it?
Strategic Rationale Why do it? • Enhances strategic and financial strength and flexibility, and growth potential of both businesses • Sharpen management focus on distinct strategic goals • Resolve the internal competition for capital by: – Allowing ONEOK to increase return to shareholders through hi
Slide 5: Separation Benefits: Capital Allocation, Investor Alignment and Valuation
Separation Benefits Capital Allocation, Investor Alignment and Valuation Benefits ONEOK, Inc. (OKE) ONE Gas, Inc. (OGS) Capital Allocation • Focus on cash flow generation • Expect lower cost of capital, and growth reflecting lower risk profile • Anticipate higher dividend • Continue to invest in and
Slide 6: Structure: Tax-free Transaction
Structure Tax-free Transaction Current Structure Future Structure ONEOK, Inc. ONE Gas, Inc. ONEOK, Inc. GP/LP Interests + LDC Oklahoma Natural Gas General Partner Kansas Gas Service Limited Partner Texas Gas Service Interests Energy Services Existing Remaining New Debt ONEOK Debt ONEOK Debt Spin off
Slide 7: Future ONE Gas Highlights
Future ONE Gas Highlights • Only publicly traded, 100% Kansas City regulated natural gas distribution utility Wichita – Three contiguous states Tulsa Oklahoma City • Maintain conservative financial policies – Prudent capital investments to promote El Paso steady rate base growth – Expect investment-
Slide 8: Future ONEOK Highlights
Future ONEOK Highlights • Free cash flow driven by ONEOK Partners’ GP and LP distributions to ONEOK, with limited capital expenditures and interest expense requirements • Cash flow supported by investment-grade MLP with predominantly fee-based earnings • Expected dividend increase to create addition
Slide 9: Post-spin Dividend Growth Illustration
Post-spin Dividend Growth Illustration Expected Impact to Current OKE Shareholders* • Higher OKE dividend anticipated post spin consistent with peer group = Dividend Growth + – Distributes majority of free cash flow + • OGS to pay dividend consistent with peer group – Retain a portion of cash flows
Slide 10: Experienced Management Teams
Experienced Management Teams ONEOK, Inc. and ONEOK Partners – John Gibson, Non-Executive Chairman Terry Spencer President and CEO Derek Reiners Steve Lake Rob Martinovich Wes Christensen SVP, CFO and SVP, General Counsel EVP, Commercial SVP, Operations Treasurer and Asst. Secretary ONE Gas, Inc. – J
Slide 11: Timeline: Completion Expected by End of First Quarter 2014
Timeline Completion Expected by End of First Quarter 2014 • No shareholder approval required • Submit IRS ruling request - filed • Board authorization - approved • Complete necessary regulatory filings – third quarter 2013 • December 2013 – March 2014 – Obtain regulatory approvals including: Priva
Slide 12: Summary: Highly Focused Energy Companies
Summary Highly Focused Energy Companies • Enhances strategic and financial strength and flexibility, and growth potential of both entities • Resolves the internal competition for capital • Attracts a more focused investor base • Allows each entity to trade on valuation metrics more consistent with i
Slide 13: Appendix
Appendix Page 13
Slide 14: How OKS Growth Benefits OKE: ONEOK's Source of Growth
How OKS Growth Benefits OKE ONEOK’s Source of Growth • ONEOK Partners’ growth Distributions Paid to ONEOK ($ in Millions) projects are expected to 21% CAGR drive continued ONEOK $548 Partners distribution growth • Two-thirds of every $437 incremental ONEOK $274 Partners EBITDA dollar, at $333 $304 $
Slide 15: Natural Gas Distribution Asset Overview
Natural Gas Distribution Asset Overview Kansas City • Third largest pure-play, publicly traded Wichita Tulsa natural gas distribution company Oklahoma City • Currently eighth largest U.S. natural gas distributor El Paso – Largest in Oklahoma and Kansas; third largest in Texas Austin – More than 2 mi
Slide 16: Natural Gas Distribution Financial Highlights
Natural Gas Distribution Financial Highlights • Goal: Minimize the gap between allowed and actual returns* – 2013 allowed return on equity (ROE): 9.9% – 2013 ROE estimate: 8.3% Operating Income ($ In Millions) CAGR = 10% $225 $216 $227 ** $210 $198 *** $189 $174 $117 2006 2007 2008 2009 2010 2011 20
Slide 17: Natural Gas Distribution Regulatory Strategy
Natural Gas Distribution Regulatory Strategy • Reduce regulatory lag – Oklahoma – Performance-based rates evaluated annually – Kansas – Gas Safety & Reliability Surcharge (GSRS) may be filed annually – Texas – Cost-of-service adjustments or Gas Reliability Infrastructure Program (GRIP) may be filed
Slide 18: Uj if
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